Time to look in the mirror


Radio is its “own worst enemy” Cumulus Media CEO Lew Dickey said in his quarterly conference call. Despite the sale of 150 million iPods and the national availability of pay satellite radio, AM and FM radio stations still attract huge audiences, even in younger demos. But Dickey says radio is failing to take control of its own destiny.

“Consumers demand for free, local push content has not wavered nor waned. Consequently, our business model of offering access to these large, local and loyal communities of listeners is not in danger of being replaced by a substitute technology. That being said, radio has been its own worst enemy when it comes to monetizing these highly valuable communities of listeners.

We’ve been myopic when it comes to prospecting and targeting both local and national advertisers, thereby allowing the market to be defined by a handful of gatekeepers who have consolidated media buying for the major accounts. As a result, price integrity and value-based selling have been replaced by often vicious rate-cutting to take share from competitors. In short, the most serious affliction facing our industry is not product-based, but rather it is rooted in the sales cultures which focus primarily on bulk demand, commonly referred to as transactional business.

I believe the cure for this affliction is to revitalize our sales staffs, transform them into organized teams of demand creators, not demand responders. In other words, we need to dramatically increase both coverage and productivity and sell the true value of our medium. Radio is the most efficient medium for local business that need to keep their brand and their value proposition top of mind with consumers – and this is especially so in challenging economic periods.

Radio’s efficiency-driven competitive advantage has three components: Number one is the lowest cost per thousand, lower than television, lower than newspaper; Number two is rifle-shot targeting to eliminate waste, which we can offer with our various formats; and Number three is relatively inexpensive production costs as compared to television, cable or even newspaper. And we need to hammer these benefits home to a broader group of advertisers with a great deal more of clarity and consistency.

It’s tough work and it requires an unremitting commitment of senior management to drive these fundamental changes through their sales organizations. But I believe the ability to successfully execute these fundamental changes will be the key determinant in the inevitable shakeout and reordering of the media landscape that’s now underway.”

Dickey spoke as he presented his company’s Q3 results and Q4 guidance. See the related story.

RBR/TVBR observation: Amen, Brother Lew! Preach the word! Radio needs to stop groveling for table scraps and go out hunting for red meat. That means feet on the street. That means sales training. That means organized sales prospecting. That means giving good people a reason to want to work in radio and rewarding them for success so that they’ll stay. Can we do it? Yes we can! (Where have we heard that slogan before?)

It also means that top management needs to lead by example. Wear out the soles of those $400/pair Johnson & Murphys. Get out and meet with real decision makers at major advertisers. Follow up personally when your stations turn down a major buy because they are trying to be too cheap. Go out and make the case that your stations are leaders, not rate whores.